Foreign exchange company
A non-bank foreign exchange company also known as foreign exchange broker or simply forex broker is a company that offers currency exchange and international payments to private individuals and companies. The term is typically used for currency exchange companies that offer physical delivery rather than speculative trading. i.e., there is a physical delivery of currency to a bank account.
Foreign exchange companies are normally distinct from money transfer companies or remittance companies and bureaux de change as they typically perform high-value transfers unlike their money transfer counterparts that focus on high-volume low-value transfers generally by economic migrants back to their home country or to provide cash for travelers. Transactions can be either spot transactions or forward transactions.
It is estimated that in the UK, 14% of currency transfers/payments are made via non-bank Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. UK forex brokers are not covered under the Financial Services Compensation Scheme. The 10 largest companies in the UK by net profit as at August 2012.
|No.||Company||Accounting Date||Pre Tax Net Profit|
|1||Western Union Business Solutions (formerly Travelex)[nb 1]||31 December 2010||£11,048,000|
|2||Moneycorp[nb 2]||31 August 2011||£7,660,000|
|3||World First UK Ltd||31 January 2012||£4,494,000|
|4||HiFX||30 June 2011||£4,486,000|
|5||Currencies Direct Ltd||30 June 2011||£4,471,000|
|6||Schneider (renamed Monex Europe Limited)||31 March 2012||£3,500,278|
|7||OptFX||09 Feb 2014||£3,387,157|
|8||Foreign Currency Direct||31 October 2011||£1,687,364|
|9||AFEX||31 December 2011||£1,583,459|
|10||Global Reach Partners/Corporate FX||31 December 2011||£1,289,000|
- It is difficult to tell the exact revenue generated by Travelex from their private and corporate foreign exchange due to the number of entities and enterprise areas they have. £10m is an estimate although the group parent entity Travelex Holdings Ltd posted a loss of £150m for the year to 31 December 2009.
- TTT Moneycorp Limited also has high-street and airport/station bureaux de change. This profit figures includes that profit.
- "Between a Rock and a Hard Place: The Dilemma of Fixed Versus Floating Exchange Rates". Earnforex. Retrieved 13 December 2013.
- "Forward FX". ICAP.com. Retrieved 13 December 2013.
- "Spot and Forward Transactions" (PDF). USBank. Retrieved 13 December 2013.
- The Sunday Times (UK), 16 July 2006
- Boyce, Lee. "Beat the foreign exchange trap: How to send money overseas cheaply and securely". MailOnline. Retrieved 13 December 2013.